A corporation actively carries on a business of marketing, developing, designing, manufacturing and selling clothing and also develops its own clothing trademarks. All these operations are carried out entirely in Canada by its employees, except for the manufacture of the garments, which is carried out entirely by unrelated companies located abroad, who own such garments until delivered to the corporation at the ship.
CCRA indicated that if the corporation exercises extensive control from beginning to end over the content, design and physical qualities of the goods and is substantially involved in those aspects, the product development, design and conception activities are activities carried out in connection with manufacturing operations, but they would not be carried out in connection with manufacturing operations in Canada since a very significant portion of the manufacturing and processing activities is carried on outside Canada.